The US election and finance – a global earthquake in the making?

November 15, 2016

Is it safe to come out yet? The shockwaves that were felt around the world as Donald J Trump was named President-elect would have been enough to knock down his infamous Mexican wall.

A global rollercoaster

Traders reached for the Gaviscon as markets swayed wildly in the first session after the result was confirmed. Markets around the world lurched downwards, suggesting the start of the apocalypse, only to turn around and head straight back up again. By the end of the day, there were slight falls in global markets, but not the black hole that many investors had predicted.

On day two, the US looked positively bullish as the Dow Jones closed at a record high, driven by companies who look to fare well under a Trump presidency.

Too soon to tell?

In truth, it’s early days. There’s likely to be an element of short-term turmoil while the fuzzy details of Trump’s agenda are brought into sharp focus.

It’s possible that his plans for tax cuts and protectionism could stimulate business and jobs and, indeed, “make America great again”. However, longer term, there is already worrying talk of a global recession if he follows through with his campaign pledge to put up trade barriers and block free trade deals.

The impact on the UK

The UK will not be protected from any slowdown in the global economy that Trump’s victory might generate. However, there may be a couple of economic silver linings:

  • Trump appears to be a fan of Britain and has said the UK will be at the front of the queue for a new trade deal.
  • The uncertainty caused by Trump’s victory balances out the uncertainty of a post-Brexit UK so may help to take the pressure off the pound.

We’re clearly living in uncertain times. Britain is leaving the EU (probably…) and, come January, Donald Trump will have the nuclear codes. So, we might be in for a bumpy ride.

BUT as long term investors we’re focused on long term returns. We don’t waste our time trying to guess short term market moves and it’s too soon to know which of the longer term “what if’s” might come to fruition. We’ll keep a close eye on everything but we’re unconcerned with the current market volatility.


This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice. The value of your investments can go down as well as up, so you could get back less than you invested.  

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